Chicago Foreclosure Activity Still Making A Comeback

The Q3 2021 U.S. Foreclosure Market Report from ATTOM confirms what we’ve been expecting. With the foreclosure moratorium out of the way US foreclosure activity is starting to pick up. According to the report third quarter foreclosure filings were “up 34 percent from the previous quarter and 68 percent from a year ago” with September “up 24 percent from the previous month and up 102 percent from September 2020”. And Illinois had the second highest foreclosure rate in the nation in September.
But as Rick Sharga, executive vice president at ATTOM’s RealtyTrac, points out foreclosure activity is still well below historic norms:

September foreclosure actions were almost 70 percent lower than they were prior to the COVID-19 pandemic in September of 2019, and Q3 foreclosure activity was 60 percent lower than the same quarter that year. Even with similar increases in foreclosures over the next few months, we’ll end the year significantly below what we’d see in a normal housing market.

Although Rick goes on to emphasize that “…there are hundreds of thousands of borrowers scheduled to exit forbearance in the next two months, and it’s possible that we might see a higher percentage of those borrowers default on their loans.”
On the other hand Black Knight’s August Mortgage Monitor Report continues to paint a bright picture of the state of the mortgage market. The nation’s delinquency rate continues to drop, hitting 4% for the first time since early 2020. So it’s possible that foreclosure activity won’t spike that high.

US Mortgage Delinquency Rate
The nation’s mortgage delinquency rate continues to improve, though it remains higher than it was pre-pandemic.

The foreclosure report also points out that the time required to complete a foreclosure is still bouncing around at the obscene upper end of the historic range – 924 days in the 3rd quarter. It’s not clear to me how much of an impact the foreclosure moratorium may have had on this aspect of the process.
Average days to complete foreclosure
It still takes an obscene amount of time to complete a foreclosure

Chicago foreclosure activity was also up significantly from last year. With 146% growth over last year, September was the 5th month in a row with a triple digit year over year percentage increase. However, in contrast to the nation as a whole, September was actually lower than August.
Chicago Foreclosure Activity
Chicago foreclosure activity has declined dramatically since the housing crisis. However, the recent plunge is the result of the moratorium placed on foreclosures in light of the Covid-19 crisis.

Chicago Shadow Inventory

With the increase in activity it’s no surprise that we’re also seeing a slight increase in the number of homes in the foreclosure process in Chicago – also known as shadow inventory. It looks like we added another 135 homes in September, on top of the August increase of 85 homes. Nevertheless, as you can see in the graph below this is way down from where it was at the depths of the housing bust.

Chicago homes in foreclosure
The number of homes in foreclosure in Chicago declined with the moratorium during the pandemic but may be on the rise now.

#Foreclosures #ChicagoForeclosures #Coronavirus
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

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